The Isle of Man Treasury has introduced new legislation that will strengthen the authority of the Financial Supervision Commission (FSC) in order to more effectively regulate the island's Corporate Service Providers (CSPs).
In early November the Draft of the Corporate Services Providers Bill 2000 received Royal Assent. The FSC, which is responsible for the licensing and supervision of the Island's banking institutions, investment businesses, collective investment schemes and building societies, has now been given powers to ensure that CSPs hold their clients' funds in accounts separate from their own, thus providing security for the clients if the CSP fails.
Furthermore the FSC will have the authority to regulate CSP applications and to investigate CSP licenceholders with regard to business practices and the provision of information. Once the majority of CSP applications have been processed, Section 2 of the Corporate Service Providers Act 2000 will be brought into operation. Under Section 2 it will then be an offence for a CSP to operate without a licence. However, if a CSP has a licence application lodged with the FSC it will be permitted to continue operating until a decision has been made to either grant or refuse the application. The FSC has invited licence applications from corporate service providers from 27 November 2000 onwards.
In a press statement the Manx government described the new law as "ground-breaking", and explained the need to regulate the providers of corporate services which form a significant part of the finance sector: 'The legislation aims to protect anyone engaging the services of a CSP in the Island by imposing on CSPs standards of "fitness and properness". By requiring all CSPs to conduct their CSP business to the highest standards through a codification of industry "best practice", the Bill also aims to protect the reputation of the Isle of Man.
The government asserts that the regulation and supervision of the CSPs will strengthen the island's finance industry and enhance its international reputation as an offshore finance centre with the highest of professional standards.
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